Politics West

Oil and gas bills have Colorado legislature pitted against Hickenlooper

By Mark Jaffe The Denver Post

Posted:
04/07/2013 12:01:00 AM MDT

Updated:
04/07/2013 12:46:21 PM MDT

H&P Drilling employees Jacob Yzaguirre, left, and Brandon Green work on a rig in Weld County on Friday. The state legislature is preparing to debate oil- and gas-development bills. (RJ Sangosti, The Denver Post)

Oil and gas drilling has swept off the plains and into the Colorado statehouse, fueling battles between the industry and community advocates and potentially between Gov. John Hickenlooper and his fellow Democrats in the legislature.

Drilling for oil and gas has nearly doubled on the Front Range since 2006, sparking local concerns and seven legislative bills — with more possible.

Others seek to buttress the role of local government in overseeing oil and gas development.

"As drilling has moved closer to neighborhoods, this has become a bigger and bigger concern," said Rep. Su Ryden, D-Aurora, who is working on a bill to clarify local land-use powers in oil and gas development.

Meanwhile, the scale of drilling is reaching new proportions in Colorado.

In 2013, the two largest operators in the region, Anadarko Petroleum Corp. and Noble Energy, are poised to spend more than $3.2 billion on Front Range oil and gas development and drill about 650 wells.

The discretionary portion of the state's budget, by comparison, is about $8.2 billion.

For Hickenlooper, who supports oil and gas development and maintains that the state has sole control over regulating drilling, the Democrat-sponsored and -supported bills create a dilemma.

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"I am very sympathetic to communities that are seeing a changing landscape and are worried about an industrial activity within a thousand feet of their homes," Hickenlooper said in an interview. "But what are you going to do, take away everyone's mineral rights?"

Oil-and-gas-industry representatives say they are willing to discuss issues such as boosting inspections, spill reporting and fines.

"Our concern is an overreach on some of these bills," said Doug Flanders, director of policy for the Colorado Oil and Gas Association, a trade group.

The legislation isn't an overreach but rather a response to massive growth in oil and gas activity, said Rep. Mike Foote, D-Lafayette, sponsor of two of the bills.

Fueled by the discovery of oil in the Niobrara shale, a formation stretching from south of Denver to the Wyoming border, new wells jumped almost 100 percent between 2006 and 2012 — to 1,713 in a six-county area, according to state data.

In 2012, Colorado oil production reached a 51-year high — 48 million barrels — and Anadarko and Noble are projecting drilling about 1,600 wells in the next five years.

In February, ConocoPhillips announced that it had found a "sweet spot" in the Arapahoe-Adams County area and is planning to drill 38 wells this year.

Almost all the activity has been in Weld County, but local officials in neighboring areas are struggling, as drilling spreads, to meet their residents' concerns over health, safety and property values.

"As a local official, you feel your hands are tied," said Rep. Dominick Moreno, D-Commerce City. "That's why you are seeing these bills in the legislature."

A lack of confidence in state regulators is also fueling much of the debate.

The city of Longmont, for example, adopted its own regulations and a ban on hydrofracturing, or fracking, a rock-cracking technique that releases oil and gas.

For its efforts, the city has been sued by the Hickenlooper administration over the rules and by the industry over its fracking ban.

"The people rose up and did this because they are not getting satisfaction from their government," Kaye Fissinger, a spokeswoman for the citizens group Our Health, Our Future, Our Longmont, testified at a hearing.

"They were not getting satisfaction from the Colorado Oil and Gas Commission," Fissinger said.

The administration is trying to find common ground with legislators on some of the bills, Matt Lepore, the executive director of the oil-and-gas commission, said in an e-mail.

But bills requiring an $8.2 million increase in oil and gas inspectors and blocking anyone paid by the industry from serving on the commission — which has three industry-designated seats — are problems, administration officials said.

"You want to think very carefully before you change the commission's mission," Hickenlooper said.

For the most part, the bills are moving on Democratic-majority votes, with no support from Republicans.

"This is a very emotional issue," said Rep. Ray Scott, R-Grand Junction, and is "vilifying a particular industry."

So when bills do reach Hickenlooper, the partisan fault line will already have been well-defined.

"It will be interesting to see what the governor does," said Peter Maysmith, executive director of Conservation Colorado, an environmental group supporting the bills.

"Representatives are bringing their constituents' concerns about a state agency they do not see as being responsive," Maysmith said. "This is democracy playing out."

The bills

The bills filed in the Colorado Senate and House dealing with oil and gas drilling and development:

HB 1267 raises the maximum daily fine for an oil-and-gas rule violation to $15,000 from $1,000, removes a $10,000 cap on any single fine and sets a minimum fine of $6,000 for health and safety violations. Sponsor: Rep. Mike Foote, D-Lafayette.

HB 1268 requires a seller to disclose if the oil-and-gas rights have been leased on a property. This bill passed the House unanimously Tuesday. Sponsor: Rep. Dominick Moreno, D-Commerce City.

HB 1269 aims to reduce conflicts of interest on the Colorado Oil and Gas Conservation Commission by not allowing people paid by the industry to serve as commissioners and removing the agency's mandate to "foster" oil and gas development. This bill is ready for a vote by the full House. Sponsor: Foote.

HB 1278 lowers the size of a spill that must be reported to state and local officials to one barrel and 42 gallons, from five barrels. Sponsor: Diane Mitsch Bush, D-Steamboat Springs.

SB 202 adds inspectors and support staff so all oil and gas facilities in the state are inspected once a year. The cost of adding the estimated 65 staffers is $8.2 million. Sponsor: Sen. Matt Jones, D-Louisville.

Mark Jaffe, The Denver Post

An oil well sits by the Wyndham Hill residential area in Frederick. (Hyoung Chang, Denver Post file)